Yes, if you retire to Spain and become a tax resident—typically by staying more than 183 days per year—you must pay tax on your worldwide income. Spain has progressive income tax rates (19%–47%) that apply to pensions and foreign income. Totalization agreements and tax treaties usually exist to prevent double taxation.
Frequently Asked Questions: Retiring in Spain as a US expat
If you live in Spain for more than 183 days in a year, you become a tax resident and must pay Spanish taxes on your worldwide income. If you stay less than that, you'll only owe taxes on income earned in Spain.
To retire in Spain, you need a non-lucrative visa or an investment-dependent Golden Visa. Note that Spain officially cancelled its Golden Visa program to new applicants in early April of 2025. The cost of living in Spain is almost 31%% lower than it is in the US, making it a more affordable option.
Yes. The United States taxes its citizens on worldwide income regardless of where they live. You'll need to file a U.S. federal tax return each year, even if all your income comes from foreign pensions or investments. However, filing doesn't mean paying.
Retirees in Spain optimise their living costs, enjoy a relaxed pace of life by the sea, and take advantage of local services and amenities. Some downsides to getting used to are a slow bureaucratic system, a unique schedule, and high taxes.
Cons of Living in Spain. While Spain offers many advantages, it's essential to consider the challenges that come with living here. Language barriers can make daily interactions difficult for non-Spanish speakers, and bureaucratic processes can be complex and time-consuming. The job market is very competitive.
Services Australia outlines the following: If you're overseas for up to 6 weeks — Generally, your pension payments will continue as normal if you're travelling for less than 6 weeks. If you're overseas for more than 6 weeks — Once you reach 6 weeks, your pension supplement will drop to the basic rate.
Under the agreement, however, you may receive benefits as long as you reside in Spain regardless of your nationality. If you are not a U.S. or Spanish citizen and live in another country, you may not be able to receive benefits.
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According to the Spanish Government, you need precisely €28,800 a year to retire in Spain. If you retire with your partner, you will need €36,000. That means a couple retiring in Spain would need €3,000 a month to live off.
Do retirees still have to file a tax return? Often yes. If total income — including pensions, investment income, or Social Security — exceeds the IRS filing requirement for the retiree's age and filing status, a return must be filed each year.
Your Quick Answer: How Do EU Citizens Avoid Double Taxation in Spain?
Finland is the world's happiest country, according to the World Happiness Report, offering retirees (and others) peace, safety, and balance. You can collect U.S. Social Security benefits while living in Finland.
£300k in a pension isn't a huge amount to retire on at the fairly young age of 60, but it's possible for certain lifestyles depending on how your pension fund performs while you're retired and how much you need to live on.
Renting in retirement offers flexibility, less maintenance, and frees up cash for travel/hobbies, while homeownership provides stability, potential equity, tax breaks, and the freedom to renovate for aging in place, but comes with upkeep costs and less mobility. The best choice depends on your financial situation, health, desire for freedom vs. stability, and long-term plans, with renting often favored for lifestyle freedom and buying for long-term financial security if the home is paid off.
Frequently asked questions about state retirement taxes
As of 2025, Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming have no individual income tax. New Hampshire is phasing out its tax on interest and dividends and expects to become a no-income-tax state by 2027.
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Roth 401(k)s and Roth IRAs, for example, provide federally tax-free income when certain conditions are met and generally don't impose required minimum distributions (RMDs) during the owner's lifetime — which can help you manage how much income tax you'll owe in a given year in retirement.
Biggest Mistakes to Avoid When Moving to Spain
They include a lack of understanding of Spain's legal processes, financial and healthcare systems, failure to connect with the local culture and language, and moving too quickly to buy a house.
The reasons for their exodus are as diverse as the expats themselves. Some grapple with the anxieties of navigating a labyrinthine bureaucracy, their hopes for a secure retirement in Spain clouded by concerns about residency, healthcare, and pensions.
The "£97 rule" in Spain refers to a Schengen area entry requirement (now around €118/day or €1,065 minimum) for non-EU citizens, requiring proof of sufficient funds for their stay, though Spanish officials call the media hype a "hoax," stating it's rarely enforced for typical tourists but applies to all Schengen countries, not just Spain, and requires showing funds, accommodation, and return tickets.